Pipettes
A pipette is one-tenth of a pip. Many forex quotes show an extra decimal place so you can see fractional pip movements.
In plain English: "A pipette is a smaller pip."
The biggest benefit of pipettes is pricing precision. The biggest risk is confusing them with full pips.
What Is a Pipette?
A pipette is a fractional pip:
- 1 pip = 10 pipettes
- 1 pipette = 0.1 pip
⚠️ Quick Reference
If your platform shows five decimals (e.g., EUR/USD 1.10567), the last digit is typically a pipette. For many JPY pairs, if you see three decimals (e.g., USD/JPY 140.257), the last digit is typically a pipette.
Why Do Brokers Quote Pipettes?
Pipettes exist because modern markets often price in smaller increments than full pips. Quoting pipettes can:
- Show tighter spreads: e.g., 0.8 pips instead of rounding to 1 pip.
- Improve quote precision: especially in fast markets where prices change quickly.
- Help execution reporting: fills can be measured more precisely.
The concept is similar to using smaller measurement units in any field: it gives more accuracy.
How to Read Pipettes on a Quote
A simple way to think about it:
| Pair type | Typical pip place | Typical pipette place | Example quote |
|---|---|---|---|
| Most FX pairs (e.g., EUR/USD) | 4th decimal | 5th decimal | 1.10567 (last digit = pipette) |
| JPY pairs (e.g., USD/JPY) | 2nd decimal | 3rd decimal | 140.257 (last digit = pipette) |
⚠️ Important
Some platforms and instruments use different quoting conventions (especially on CFDs and synthetic instruments). Always confirm how your platform defines "pip" for the instrument you're trading.
Examples: Pips vs Pipettes
Example 1: EUR/USD move
EUR/USD moves from 1.10560 to 1.10567. That is 7 pipettes = 0.7 pips.
Example 2: USD/JPY move
USD/JPY moves from 140.250 to 140.257. That is 7 pipettes = 0.7 pips.
The math is simple: 10 pipettes = 1 pip.
Common Pipette Mistakes (and Fixes)
- Counting pipettes as full pips: overestimating movement and P&L by 10x.
Fix: treat the last digit as 0.1 pip on 5-decimal quotes. - Misreading spread: thinking "0.8" means 8 pips.
Fix: confirm whether spread is shown in pips (e.g., 0.8) or pipettes. - Risk sizing errors: setting stops/targets by the wrong unit.
Fix: set stops/targets using the platform's pip distance tool or order ticket. - Ignoring instrument conventions: assuming all instruments use pips.
Fix: for indices/futures/shares, use points/ticks instead.
⚠️ Beginner Rule
If you're unsure, open a demo account and place a mock order. Most platforms show the stop distance in pips/points automatically.
Common Misconceptions
- "Pipettes change my profitability."
They don't change market behaviour — they improve quote precision. Your profitability depends on strategy, costs and execution. - "If I see five decimals, the last digit is always a pipette."
Often true for forex, but not universal for every CFD/instrument. Always confirm the quoting rules for your instrument. - "Pipettes make spreads cheaper."
They can show tighter spreads more precisely, but actual costs still depend on the broker's pricing and market liquidity.
✅ Quick Checkpoint
Try answering before expanding the model answers.
1) How many pipettes are in 1 pip?
10 pipettes.
2) On a 5-decimal EUR/USD quote, what does the last digit represent?
Typically a pipette (0.1 pip).
3) What is the most common pipette mistake?
Counting pipettes as full pips, causing a 10x error in movement or risk calculations.
Next lesson: Points.
Frequently Asked Questions: Pipettes
Are pipettes used outside forex?
The term "pipette" is mainly forex-specific. Other markets use different minimum increments such as ticks, points, or cents.
Do all brokers quote pipettes?
Many do, but not all. Some brokers still use 4-decimal quotes (no pipettes) for major FX pairs. It depends on the platform and liquidity model.
Is 0.1 pip the same as 1 pipette?
Yes. A pipette is one-tenth of a pip.
How do I convert pipettes to pips?
Divide by 10. For example, 7 pipettes = 0.7 pips.
Summary
A pipette is one-tenth of a pip. Brokers quote pipettes to show tighter, more precise prices and spreads. The key risk is confusing pipettes with full pips and mis-sizing your trades.
Next lesson: Points.